Understanding Your 403b Calculator and Terms
A 403b calculator allows you to estimate the amount you can save in your 403b plan when you retire. There are many different 403b calculators today, but they work in pretty much the same manner and require pretty much the same information to be used for computation.
General 403b Calculator Definitions
Current Age in Years
This is your present age in years.
Anticipated Retirement Age in Years
This is the age in years that you plan to retire.
Life Expectancy in Years
This is your life expectancy as you reach your predicted retirement age.
Current Amount in 403b Fund in US Dollars
If you have a 403b fund at present, then this is where you enter the amount in that account on your 403b calculator. If you have not started your 403b funding yet, you can just enter zero.
Annual Contribution to 403b (Percentage of Your Salary)
This is how much you want to contribute, or are currently contributing, to your 403b plan expressed in terms of a specific percentage of your salary. The effect of decreasing or increasing your yearly contribution percentage will be seen on your 403b fund balance on your retirement.
Employer Match (Percentage of Contribution)
Employers will typically match employee contributions in order to provide employee benefits, and to make them participate in the company’s program. If your employer does this, put that percentage here. Otherwise, then enter zero.
Employer Maximum (Percentage of Salary)
There are employers that only match up to a specific percentage of their employee’s salary. If your employer has a maximum that applies to their match, that amount goes here. The present limit on employer matches is 6%.
Expected Annual Return on 403b Fund (Percentage)
This is your predicted annual rate of return, which you are expecting to realize on your 403b fund beginning now and when your retirement comes.
403b Fund Growth Over Time (in US Dollars)
This is the computed 403b fund increase over time as you become older. This series of numbers, which is affected by employee-employer matching and your inputted growth rate, and limits your contributions to what the law (2015) currently allows.
403b Fund Balance at Retirement (in US Dollars)
This is the amount you will have in your 403b fund upon retirement, if you make contributions annually, you achieve your projected rate of return, and your employer keeps matching funds at the rate you’ve indicated.
Salary at Retirement Age (US Dollars/ Year)
This is your estimated salary upon reaching the retirement age you’ve earlier specified.
Annual Income from 403b (US Dollars / Year)
This is the retirement income you can expect your 403b account to give you annually. Remember that withdrawals from 403b funds are taxable, and inflation will reduce the buying power of such future dollars.
Percentage of Final Pay
This is the portion of your salary as you reach retirement age that could be replaced by your 403b funds. All retirement income sources need to replace 70% to 80% of your final pay as a rule of thumb. A 403b calculator definitely comes in handy not just for this but for all other related computations.